Koei to start game-rental biz in Japan

Today in Japan, Koei announced that its game distribution subsidiary Koei Net will launch a game-rental business, an unprecedented offering that will shake up Japan's game market. Until now, the Japanese game industry has successfully blocked efforts to introduce rentals here, claiming they would hurt game sales and reduce revenue.

Koei believes that just the opposite is true. According to Koei, rather than cannibalizing game sales, its game rental service will yield an additional revenue stream for publishers, resulting in higher total revenue. The industry will soon see which viewpoint is right: Koei Net's service, dubbed "RentaNet," will launch in the second half of May.

Impress Japan, a Japanese online news site, reported the details from Koei's press conference. Perhaps the most important factor governing the success of this venture is publisher participation, and according to Impress, Koei was tight-lipped in response to questions on this topic, saying only "we have a good number of partners," and refusing to provide exact numbers or company names.

The company was more forthcoming about the details of its service, including revenue sharing and proposed pricing. Most notably, publishers will take home a healthy slice of rental revenue: For every game rental, Koei plans to hand over a whopping 45 percent of fees to the game publisher--a generous offer that will go a long way toward helping the company find partners. Koei will collect 10 to 20 percent of the rental cost as its fee for creating and maintaining the rental system--which will include point-of-sale terminals, inventory systems, and member administration--and the rental shop will retain the remainder.

Koei also discussed its proposed fee structure, unveiling a tiered model that places a high premium on new titles. To maximize sales, new games will not be offered until they've been on the market for at least one month. After one month, and until a given game is three months old, it will be available for rent at 2,700 ($23.50) or 2,800 yen ($24.40) for a five-day rental. There will be a sharp discount for older games; titles that are three months to one year old will rent for 800 ($6.95) or 900 yen ($7.85), and titles more than a year old will rent for just 500 yen ($4.35).

Koei plans a slow start, but believes the potential for this new service is sky-high. Plans call for the first rental location to open in May, with a total of 12 stores by August, and an ambitious 1,500 locations in 2008. One way the company plans to hit that target is to think outside the box. In addition than traditional rental venues like movie-rental stores, the company also envisions placing RentaNet counters at amusement centers, saying "offering rental operations at locations visited by gamers will broaden the channel."

Gamespot will have more news on this venture, including a list of Koei's partners, as it becomes available.